Deepening the Economic and Monetary Union

Following the outbreak of the economic and financial crisis, the European Union took unprecedented measures to strengthen the Economic and Monetary Union and make sure that Europe is better prepared for future shocks. As a result, the euro area architecture is now much more robust than before. However, further work lies ahead to make sure that the benefits of the Economic and Monetary Union reach all EU citizens.

Five Presidents' Report

The crisis that hit Europe in 2008 laid bare some of the institutional weaknesses of the euro area. As an emergency response, a number of instruments were proposed and adopted. They provided firewalls, assisted the countries most affected, and ensured better policy coordination. However, these emergency measures needed to be consolidated and completed to make sure that Europe is better prepared for future shocks.

Therefore, the Presidents the European Commission, the European Parliament, the European Central Bank, the European Council, and the Eurogroup published the "Five Presidents Report". The document laid down a roadmap to deepen the Economic and Monetary Union in two stages, and complete it by 2025 at the latest. Since then, a lot has been done in order to "deepen by doing". EU economic policy coordination – the European Semester – has been strengthened, the toolbox for EU level economic governance has been improved with the creation of National Productivity Boards and a European Fiscal Board, and important steps have been taken towards completing the Banking Union and the Capital Markets Union. However, the euro area architecture is not yet complete.

Reflection Paper on the deepening of the Economic and Monetary Union

The Commission presented the Reflection Paper on the deepening of the Economic and Monetary Union on 31 May 2017 precisely to recall these gaps and outline a possible way forward. The paper was part of the broader debate on the future direction of the European integration, which was initiated by the White Paper on the future on Europe, published by the Commission on 1 March 2017.

The White Paper presented five scenarios for how the Union could evolve, depending on the choices made by European leaders. The Reflection Paper on the deepening of the EMU aimed to take this debate forward with a particular focus on the future of the Economic and Monetary Union. It proposed options to help build a broad consensus on how to take on the challenges and to give a fresh impetus to this important debate.

EMU deepening package

In his 2017 State of the Union speech, President Juncker announced concrete measures to address some of the remaining shortcomings identified on the previous steps of this journey. On 6 December 2017, the European Commission presented a package of initiatives to deliver on those promises. The proposal aims to increase the unity, efficiency and democratic accountability of the Economic and Monetary Union. They are about guarding against a repeat of the crisis, and about re-launching the process of convergence to achieve good jobs, high incomes and living standards in Europe.

The package includes :

A Communication on the further steps towards completing the Economic and Monetary Union.

A proposal to bring the European Stability Mechanism (ESM) into the EU legal framework, transforming it into a European Monetary Fund.

A proposal to double the financial envelope of the Structural Reform Support Programme.

A proposal to integrate the substance of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, which includes the Fiscal compact, into the framework of EU law.

A Communication spelling out ideas for a new dedicated euro area budget line within the EU budget, to provide for four functions: structural reform assistance; a stabilisation function; a backstop for the Banking Union; and a convergence instrument to give pre-accession assistance to Member States on their way to euro membership.

A Communication on establishing a European Minister of Economy and Finance, to increase the democratic accountability and the efficiency of policy making.